Optional 10-year writeoff of certain tax preferences
(1) In general
(1)In general#
For purposes of this title, any qualified expenditure to which an election under this paragraph applies shall be allowed as a deduction ratably over the 10-year period (3-year period in the case of circulation expenditures described in section 173) beginning with the taxable year in which such expenditure was made (or, in the case of a qualified expenditure described in paragraph (2)(C), over the 60-month period beginning with the month in which such expenditure was paid or incurred).
(2)Qualified expenditure#
For purposes of this subsection, the term “qualified expenditure” means any amount which, but for an election under this subsection, would have been allowable as a deduction (determined without regard to section 291) for the taxable year in which paid or incurred under—
(A) section 173 (relating to circulation expenditures),
(B) section 174A(a) (relating to domestic research or experimental expenditures),
(C) section 263(c) (relating to intangible drilling and development expenditures),
(D) section 616(a) (relating to development expenditures), or
(E) section 617(a) (relating to mining exploration expenditures).
(2)(A)#
section 173 (relating to circulation expenditures),
(2)(B)#
section 174A(a) (relating to domestic research or experimental expenditures),
(2)(C)#
section 263(c) (relating to intangible drilling and development expenditures),
(3)Other sections not applicable#
Except as provided in this subsection, no deduction shall be allowed under any other section for any qualified expenditure to which an election under this subsection applies.
(4)Election#
(A) In general An election may be made under paragraph (1) with respect to any portion of any qualified expenditure.
(B) Revocable only with consent Any election under this subsection may be revoked only with the consent of the Secretary.
(C) Partners and shareholders of S corporations In the case of a partnership, any election under paragraph (1) shall be made separately by each partner with respect to the partner’s allocable share of any qualified expenditure. A similar rule shall apply in the case of an S corporation and its shareholders.
(4)(A)In general#
An election may be made under paragraph (1) with respect to any portion of any qualified expenditure.
(4)(B)Revocable only with consent#
Any election under this subsection may be revoked only with the consent of the Secretary.
(4)(C)Partners and shareholders of S corporations#
In the case of a partnership, any election under paragraph (1) shall be made separately by each partner with respect to the partner’s allocable share of any qualified expenditure. A similar rule shall apply in the case of an S corporation and its shareholders.
(5)Dispositions#
(A) Application of section 1254 In the case of any disposition of property to which section 1254 applies (determined without regard to this section), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section 1254, be treated as a deduction allowable under section 263(c), 616(a), or 617(a), whichever is appropriate.
(B) Application of section 617(d) In the case of any disposition of mining property to which section 617(d) applies (determined without regard to this subsection), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section 617(d), be treated as a deduction allowable under section 617(a).
(5)(A)Application of section 1254#
In the case of any disposition of property to which section 1254 applies (determined without regard to this section), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section 1254, be treated as a deduction allowable under section 263(c), 616(a), or 617(a), whichever is appropriate.
(5)(B)Application of section 617(d)#
In the case of any disposition of mining property to which section 617(d) applies (determined without regard to this subsection), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section 617(d), be treated as a deduction allowable under section 617(a).
(6)Amounts to which election apply not treated as tax preference#
Any portion of any qualified expenditure to which an election under paragraph (1) applies shall not be treated as an item of tax preference under section 57(a) and section 56 shall not apply to such expenditure.